Picking Your Patients: Selective Admissions in the Nursing Home Industry

Abstract

Do healthcare providers pick their patients? This paper uses patient-level administrative data on skilled nursing facilities in California to estimate a structural model of selective admission practices in the nursing home industry. I exploit within-facility covariation between occupancy and admitted patient characteristics to distinguish admission patterns attributable to selective admission practices from those attributable to heterogeneous patient preferences. In spite of anti-discrimination laws, I find strong evidence of selective admission practices that disproportionately harm Medicaid-eligible patients with lengthy anticipated stays. Counterfactual simulations show that enforcing a prohibition on selective admissions would increase access for these residents at the cost of crowding out short-stay non-Medicaid patients from their preferred facilities. I simulate two additional policies intended to mitigate selective admissions: raising the Medicaid reimbursement rate and expanding capacity. I find the latter to be less costly and more effective than the former.

Keywords: Industrial Organization, Health Economics, Healthcare, Nursing, Long Term Care, Choice Sets, Dynamics, Admission Control

JEL Classification: L, L00, L1, L11, L2, L20, L21, L5, L50, L51, I1, I10, I11, I14, I18, I3, I38, K2, K23, D24, D45